Utah Mortgage Pro

Sanity in Mortgage Lending Guidelines coming to Washington???

Wow...for the first time in a long time I just came across some potentially good news for a great piece of mortgage legislation. The "Helping Responsible Homeowners Act of 2011" has been on the table since January. As with most good ideas I figured this one would be shelfed as fast as it was printed. It was brought to my attention today by Rob Chrisman from www.mortgagenewsdaily.com that apparently this legislation may not be dead and in fact it may be gaining some traction.

Here is what he said: "Yesterday officials held a conference call promoting the "Helping Responsible Homeowners Act of 2011." Originally introduced in January, the bill aims to remove the barriers that keep non-delinquent, existing borrowers from refinancing. Those in the mortgage business should be interested to know that they are proposing to eliminate LLPAs and adverse delivery charges for loans - the GSEs could not charge any additional upfront fee beyond the standard guarantee for a qualified mortgage. (In effect, this would lead to only one standard guarantee fee for all borrowers.) It would remove LTV limits for underwater borrowers so mortgage refinancing would not be limited by the LTV of the borrower. (Currently, borrowers in the HARP program can have a maximum LTV of 125%. Removing this constraint could allow up to 10-15% of borrowers in the 2005-07 vintages to be eligible for GSE refinancing.) It would remove the second-lien barrier to refinancing so that servicers and creditors that refuse to have their second liens "resubordinated" in the refinanced mortgage would be prevented from originating new GSE loans. And it would ensure that higher LTV borrowers receive a fair mortgage rate, suggested at no more than 40 basis points higher than the GSEs' 60 day commitment rates."

It has never made sense to me why Fannie Mae and Freddie Mac (GSE's) would not allow borrowers who were making their payments on time to refinance these loans in some sort of streamline program where appraised value is not important. If your main goal is to keep home owners in their homes and to help them to continue to make their payments on time, why then would you not throw them a preverbial bone? Trip and fall all over yourselves to find a way to work with those that havent made a payment in 6 months but leave the ones who are busting their hump to makes ends meet high and dry??

Statistics have shown that more then 20% of the borrowers who recieve a loan modification are in default (more then 30 days behind) again within 1 year. Yet we are cutting loan balances and dropping rates to as low as 2% for these folks. Now I want to be very clear here, I am not saying that we should stop loan modifications for those who are at risk of losing their homes. I am saying that I think a bill like this allowing Fannie and Freddie to loosen their refinancing guidelines for those who have and are making their payments on time makes a lot of sense.

It would be a nice shot in the arm for the economy to have 10-15% of home owners who still have rates in the 6% range to drop more then 1% off of their interest rate which would save the average home owner here in Utah about $183.33 per month. That is a lot of potential cash that could find its way back into our local and national economies each month.

I am hopeful but still not holding my breath, I have learned over the last couple of years the hard way that Sanity and Mortgage Lending Guidelines and legislation don't often keep the same company.

Stetson Lowe -Security Home Mortgage-

FHA Mortgage Insurance Increasing Again April 18, 2011

 

 
We have three brand-spankin' new Mortgagee Letters from HUD (new guidelines come out in the way of mortgagee letters.)  The first of the 3 letters is the one that will affect all buyers using FHA loan products.  The monthly MI (mortgage insurance) factor is being increased once again.  Since October 4, 2010 the monthly mortgage insurance factor has been set at a rate of .90 annually.  This was a huge increase over where the monthly MI had been set at .55 annually, paid monthly prior to that date.

The new increase coming on April 18, 2011 will increase the monthly paid MI once again from .90 to 1.15, an increase of 25 basis points.

This is a quick example of how the monthly mortgage insurance is calculated and how it will break down on an average purchase price of $225,000.

Purchase price $225,000
Down Payment 3.5% ($7875)
New loan amount = $217,125
Upfront Mortgage Insurance (1%) = $2171.25
New total loan amount with upfront MI =$219,296

Principal & Interest Payment at 4.75%= $1143.95
Old Monthly Mortgage Insurance @ .90=$162.84
New Monthly Mortgage Insurance @ 1.15=$208.08

The difference in the old and new monthly MI is $45.24 per month on an average purchase price.  Just to give you an idea that is like increasing the rate by .375% on an average loan amount.  Its amazing to me that in one fail swoop FHA comes in and effectively increases every ones payments by an amount equivalent to .375% on average.  If you look at what they have done since October 4, 2011 it is even more shocking, on an average purchase price the monthly MI increase has increased the monthly mortgage payments by $109 per month which has roughly the same effect on the borrower as increasing the interest rate by .750%.

By increasing the monthly mortgage insurance premiums again it will make the same borrowers qualify for lower purchase prices thereby keeping more pressure on already pressure cooked home values. 

In my opinion HUD, which has recently reported the highest reserves in the last decade, is being very near sited by looking at increasing cash flow, this at a time when $109 per month to the average home buyer may be the difference of them buying a new home or staying where they are.

Its making the conventional MI products a lot more attractive these days, maybe that's what HUD wants???

Bottom line is this....If you are looking to buy a home this spring or summer you will need to apply with your mortgage company prior to the 18th of April.  Make absolutely sure that your loan officer has ordered your case# prior to that date if you have a property identified.

If you are planning on working with me on your financing then no need to worry, I will make sure your case# is in the file the day we have an accepted purchase contract.

Stetson Lowe - Utah Mortgage Broker

Why you need to get Pre-Approved not just Pre-Qualified for your new home

I talk to many people each week here in Utah that call and ask if they can get pre-qualified to purchase a new home.  My response to them is often the same "I would be happy to get you pre-qualified but what you really need to do is get fully pre-approved prior to beginning your home search."  The difference is simple.  Pre-qualification means that you tell me how much money you make, what your approximate credit score is, what your debt payments are each month, and how much money you have in the bank.  We also may discuss how long you have been at your current job, in the same line of work, at your current and former addresses and so forth.  Sounds pretty thorough right?  The only problem is you are telling me all of these items with out me actually verifying them with supporting documentation.

What's the big deal just take my word for it.....

Many of you are in such a hurry to move on to the house hunting that you don't want to take the time necessary to put together all of your supporting documentation i.e. tax returns, W2's, pay stubs, bank statements, etc.  The problem with this is that a good deal of the time I find that there are some minor and or major discrepancies from what people tell me and what the real story is.

Do people flat out lie?

For the most part I would say absolutely not.  It's just that people sometimes think that there credit score was 700 8 months ago when they bought that new car so it must be higher then that now.  They forget that getting a new loan can lower your score, or they may not know that their wife has added a couple thousand dollars to their RC Willey credit card balance and that has hit their credit score pretty hard.

Another thing I see all the time is someone who has worked at their job for a year or so and they get paid $36,000 per year salary and another $7,000 in commissions or bonus income.  They then tell me that they make $43,000 per year.  True.  The problem is, if I were to qualify them at $43,000 and they went out and put an offer on a home based on that pre-qualified amount they would be very disappointed when they got the offer accepted and then brought me their income documentation at which point I would have to break the bad news to them that we can only use the $36,000 base salary for qualifying as you have to have a 2 year history of overtime, bonus, or commission in order to count them for qualifying purposes.

That is just one example of things that can be missed with just a basic pre-qualification versus a full pre-approval.  There are many many more reasons to get fully pre-approved and one of the best reasons is this,

NO SURPRISES.....

If you have already taken the time to get your full income documents together and into me then I will go through it and come up with your qualifiable income.  I will then have the underwriter do the same so that we know exactly what you qualify for right down to the dollar.  We will run a tri-merge 3 bureau credit report, order verifications of employment and 4506T tax transcripts from the IRS.  We will have a full file all ready to close once you find the home of our dreams.

Using a Real Estate Agent....

I highly recommend the use of a professional Realtor to help you buy a home.  The benefits are numerous and the cost is usually FREE to you.  In Utah it is customary to have the sellers pay the buyers agent commission.  I would say in over 99 out of 100 homes sold the buyers agent commission is paid by the seller if not 100 out of 100.  So why not have an advocate on your side.  Someone who can watch out for your best interests and help to make sure that what you see is really what your getting.  Click here to see a list of my preferred agents.  I have personally worked with each one of these agents and hand picked them from 1000's of licensed agents here in Utah.

Appraisal and Title Work....

Once you find that perfect home all that is left on our end since you got fully approved is to order an appraisal and title work.  We can usually have these items back in just a few short days.  Once they come back and if everything is acceptable to you such as the title history and the appraised value, we will then hand in the full file to be underwritten in house just a few feet away from my office.  I will not send your file off to be underwritten like most banks and ALL brokers do.  I will simply walk the file over to our underwriters desk and put it in her stand up to be underwritten and approved within 24 hours.

Clear to Close....

Once your file is approved and we have met any conditions then you are clear to close.  We then order docs and make arrangements with the title company to set up a closing time.  See how easy that is?  Compare this to finding your home first and then compiling your paper work, then having us order all of the required verifications, then ordering the title and appraisal.  We can usually shave a week or 2 off of the closing time frame and make the whole process much smoother and more relaxing .

So before you start looking for your next home....

Remember to get fully pre-approved.  It makes your offer much stronger if you can tell the sellers that you are fully pre-approved and that you can close in 2 weeks versus 30-45 days like most people who will be submitting competing offers.  You can start the pre-approval process today very simply by applying online 24 hours a day at www.applywithstetson.com or call me at 801-318-4996. 

Stetson Lowe - www.applywithstetson.com - Utah's #1 mortgage professional

 

Rent vs. Own - Right Now The Answer is Easy

 

I am sure their will come a day again soon where the proverbial question should I rent a home or buy a home will actually be a difficult one.  Fortunately for most right now the answer is easy, BUY!!

Here are a few reasons why I personally feel its not even a question (at least for the next few months).

1.  FREE MONEY.  With the feds handing out $8,000 big ones for the next few weeks and possibly months depending on your contract why not take old Uncle Sam up on a big hand out.  It's kind of like having the rich uncle I never had, except Uncle Sam is not rich but he acts like it and he has a money printer so whats the diff?

2.  Lowest average interest rates in nearly 40 years.  Yes there have been a few dips where rates were a few 10th's of a percentage point lower then they are today but on average there never has been and never will be a time where you will pay The Man less interest on your loan.

3.  Low Home Prices.  With bank owned REO properties dotting the landscape and short sales starting to pour in it has brought all of the home prices here in Utah back down to a manageable price range.  You can pick up a great starter home built in the last 10 years with everything you NEED for less then $200,000.  Need being the key word there.  Sure you can still spend as much as your heart desires on a home but at least the entry level homes have come back down to earth.  When the banks finally churn through their foreclosures watch out as the cost of building a home has not come down as much as the prices have so I expect the price of new home's to jump back up in the next 2 years.

4.  Tax breaks.  In a time where there is no where to go but up for our taxes you need to have every tax advantage you can.  The 1098 tax form from my mortgage company is the only letter they send me every year that I am happy to see in the mail box.  It will literally increase your tax return by $1000's of dollars every year.  Not to mention energy saving tax credits you qualify for when you do energy improvements to your home like adding insulation to the basement, attic and air ducts.

5.  Having something you can call your own.  Can you even put a price tag on being able to paint a wall any color you want any time you want with out having to call your landlord for approval.  How about if you want to switch from cable to direct tv, you wont be at the mercy of your landlord who may put the kibosh on any satellites on the roof.

6.  Building equity for you not your landlord.  I actually am a landlord and do own rental property so in the essence of full disclosure I have to admit that I do benefit from tenants who help build my equity.  If they ask me I always tell them that we need to get them on the road to home ownership.  It's everyones right to own their own piece of property, a place they can call their own.  For some the road to home ownership is longer then for others do to credit issues, income limitations and for other very valid reasons.  There are those that could be buying a home right now, those are the ones I am talking to when I say stop building your landlords equity and start building your own.

7.  Neighborhood, schools for your kids, growing your own garden.....

 

The list could literally go on and on but I think you catch my drift.  Right now with the financing options that still allow some to get into a home with little or NO down payment there is really no reason (if you qualify) you should be renting over buying a home.

Here is a link to a great Rent vs Buy Calculator you can go to and plug in your own numbers or those of a client if you are an agent and have a client that needs a little more proof that renting is better then buying.  With this Rent vs Buy Calculator you can see if a dollar amount how much of an advantage it would be to buy a home right now over continuing to rent. 

So if you live in Lehi, American Fork, Pleasant Grove, Lindon, Orem, Provo, Springville, Spanish Fork, Payson, Santiquin, Saratoga Springs, Eagle Mountain or  even Ogden to St. George you should really take a closer look at buying rather then continuing to flush your rent money down the toilet every month.

Take the plunge get pre-qualified today!

Stetson Lowe - Security Home Mortgage

Security Home Mortgage is a correspondent lender.  We are a leader in Utah in FHA, Utah Housing, USDA Rural Development, Conventional Fannie Mae and Freddie Mac Mortgages.

Utah Housing a wonderful 0 down payment option

 

There is a lot to be said of the great mortgage program administered through the Utah Housing Corporation.  This 0 money down mortgage option is a fantastic way for home buyers to make the dream of home ownership become a reality. 

Here's how it works for you if you are looking to buy a home and down payment is standing in your way.  First contact a lender who is approved to do Utah Housing loans.  Obviously I am partial to Security Home Mortgage and our great UH loans.

Second you need to fill out an application either on line www.applywithstetson.comor in person.  Some helpful information to have handy while filling out your application would be your W2's and or pay stubs so you know your gross income, your personal information such as your social security # and date of birth and your employment and residence history for the last 2 years.

Third check to see if you qualify for a Utah Housing 0 down Mortgage.  Currently UH requires a 660 fico and a standard FHA automated approval through FHA scorecard Fannie Mae's FHA automated underwriting engine.

Once you are pre-approved this is what you can expect.  You will have a 1st mortgage which is a standard FHA loan.  You will also have a 2nd mortgage which will be for up to 6% of the 1st mortgage amount.  The proceeds from this loan can go towards down payment requirements (currently 3.5% of the purchase price on an fha loan) and closing costs.  As of the time of this post the current Utah Housing interest rate is 4.75% on the 1st mortgage and 7% on the second mortgage.

You will be required to pay upfront and monthly mortgage insurance just like you would with a standard FHA loan.

Utah housing mortgage loans may not be for everyone, if you have down payment saved or if you are able to have down payment funds gifted to you, you might be better off with a Conventional loan or an FHA loan, if you are buying a home in a rural area you may even want to look into the USDA Rural Development loan as well.

If down payment is holding you back I would definitely recommend checking into the Utah Housing loan, especially for the next couple of months while you can still take advantage of the $8000 tax credit being offered from the IRS, the $8000 can be used to pay back the Utah housing 2nd mortgage although there are limitations to how quickly you can pay off the loans with out incurring a penalty.

Click on this link for a list of frequently asked questions about on Utah Housing Mortgage Loans

You can also view the income limits in your county.

Or to find out more give me a call.

Stetson Lowe - Security Home Mortgage - 801-318-4996